Honda BF200 Grinding Noise When in Neutral Gear and TStat Leaks.

Honda BF200 grinding noise when in neutral gear and water leaking out of the thermostat housing causing salt build up.

I replaced the mid shaft bushing 2 months ago and thermostat (with new o-ring) around the same time. I went a 6-8 trips no issue but noticed under the cowl salt was building up around the housing the week before and grinding noise when in neutral. The noise cleared out when I turned the engine off and back on, no issues after that. The noise doens't come up at all when in gear, forward or neutral, soon as I shift in Neutral.

Last trip, pulled the thermostat, cleaned as much as possible, oiled the o-ring and tightened tstat housing again still got the same problems. Thanks in advance.

Pull both T-stats and closely inspect the lip and O ring seating. I suspect that saltwater has eaten away some of of the aluminum and you are not getting a good seal. If it is not too bad, clean it up and repair with JB Weld. If the damage is in the fitting that goes over the t-stat, replace it.

As for the lower end grinding in neutral, I think you're going to need to pull the lower end again and check that intermediate bearing. Sounds like it might be spinning on the shaft. Other possibilities are that the shift rod holder is worn or has come loose. Either way, you will need to drop the lower unit and check it out. Highly recommend you get a Helm shop manual to do all of that.

Note on the grinding in neutral gear. Found out a week ago why it was grinding. The key to start the motor was somehow in between the Start and On, so it was the starter that was trying to kick in as it would if it believed it was in Neutral. So anytime I would shut the motor, start up the sound would go away. But if the key was still in the starting position and I shifted from neutral/forward/reverse then on occassion depending on where the key was at it would grind away.